INDIANAPOLIS -- Peja Stojakovic, Vlade Divac and the Yugoslavian team danced, hugged and celebrated at the center of Conseco Fieldhouse.

More than 1,000 of their flag-waving, chanting supporters serenaded them with cheers and applause.

	Vlade Divac towers over Reggie Miller as they vie for control of the ball.

Pulling off one of the biggest victories in its history, Yugoslavia defeated the United States 81-78 Thursday night in the quarterfinals of the World Championships.

The Yugoslavs weren't the first to beat a U.S. team of NBA players -- the Americans lost 87-80 to Argentina a night earlier -- but that really didn't matter.

Yugoslavia had been looking forward to playing the U.S. team for months, and the manner in which they won validated all their hard work and bold talk.

"You can't imagine how happy my people are. They feel so good right now,'' Stojakovic said. "They've been up at 3 a.m., getting out of bed and watching this thing. They love this. We wanted to win for them.''

In Belgrade, Yugoslavs fired shots into the air and danced and sang to celebrate their team's victory.

"Vlade Divac for President,'' fans in the streets of the capital shouted. Serbia has presidential elections later this month.

Several thousand people celebrated the victory at a downtown square. The fans took to the streets in cars and on foot, honking horns and setting off firecrackers.

In New Belgrade, residents set off fireworks and lit flares.

Yugoslavia fought back from a 10-point deficit in the fourth quarter to send the U.S. team to yet another loss.

The semifinals of this topsy-turvy tournament will be played Saturday, and the American team will not be participating.

The best the U.S. team can do now is finish in fifth place.

"It's embarrassing, on our home turf,'' Miller said. "We have to walk away from it as a learning experience.''

Yugoslavia advanced to a semifinal matchup with New Zealand, which surprised Puerto Rico 65-63. Also in contention for the gold medal are Germany, which defeated Spain 70-62, and Argentina, a 78-67 victor over Brazil.

The Americans will play in the consolation round against Puerto Rico on Friday night.

Losing for a second straight night was devastating to the Americans.

George Karl sighed as he dug his fingers into his forehead, struggling to find the correct words to express his disappointment. Next to him sat Michael Finley, his chin resting on his fist and his eyes barely open.

"You're seeing the rest of the world playing better basketball, special basketball. I'm not sure it's the end of an era so much as it's a celebration of basketball,'' Karl said.

Stojakovic, one of five NBA players on Yugoslavia's roster, scored 20 points. Vlade Divac added 16 -- all in the first half -- and Milan Gurovic had 15.

Gurovic hit his third 3-pointer of the fourth quarter to give Yugoslavia a 77-73 lead with 56 seconds left, capping an 18-4 run.

Andre Miller answered with a 3-pointer 18 seconds later, and Marko Jaric sank two free throws with 23 seconds left to restore a three-point lead.

Reggie Miller got open underneath for a layup with 13 seconds left, and the Americans quickly fouled Jaric. He sank both, and the Americans -- out of timeouts -- were forced to try to tie it from behind the 3-point arc.

Andre Miller's long attempt came up short.

"This is a great victory for us,'' said Divac, who stated a week ago his team knew it could beat the United States. "It's not fair for the U.S. team because there is so much pressure on them, and the international game is a different game than they're used to.''

The Yugoslavian players hugged, kissed and high-fived their supporters for almost an hour after the game; the Americans left the arena in shock.

"It's so brand new, we'll have to evaluate what we'll do for '04,'' USA Basketball executive director Jim Tooley said. "We'll go qualify (for the Olympics) next year and think about what our next move is.''